On-Demand Ride-Sharing Service Lyft Adds $1 Million In Excess Liability Insurance For Drivers

Zimride’s local, on-demand ride-sharing service, Lyft, has gotten a lot of positive press since launching as an alternative to cabs and Ubers in San Francisco. But it’s always had some legal, regulatory, and safety questions hanging over it in the two or three months since it launched in private beta. Now that’s the service is available to all, Lyft taken one big step toward answering the question of what happens if someone gets into an accident while a Lyft passenger is in the car, by securing supplemental insurance for all its drivers.

Lyft says it will now provide drivers with excess liability insurance of $1 million for any incident that occurs while a passenger is in the car. The policy doesn’t cover collision damage, but will offer protection above and beyond drivers’ own liability policies. It’ll be available free of charge to every Lyft driver while transporting a passenger booked through its platform.

While peer-to-peer marketplaces like Lyft, Airbnb, Taskrabbit, and others make it easier for users to more efficiently share assets and skills, there’s always the potential for abuse or unintended consequences. (Zaarly co-founder Eric Koester wrote up a good primer on Quora about the types of issues peer-to-peer marketplace startups face, which can be read here.)

Lyft says it carefully vets all the drivers, claiming that fewer than 5 percent of applicants get accepted. But accidents are bound to happen, and any marketplace startup is just one horror story away from horrible press coverage and the possibility of regulation and legislation designed to shut services like it down.

The company’s new insurance policy should provide a little extra peace of mind to passengers considering worst-case scenarios when booking a ride in a stranger’s’car for the first time. It also shows that Lyft takes the well-being of its drivers seriously — enough so that it’s willing to add excess liability insurance in the case of accidents that might happen. And by showing that it’s protecting drivers and passengers with $1 million in supplemental insurance, Lyft might be able to better navigate some of the regulatory issues it could face down the line.